CFPB Outlines Plans for Mortgage Servicers

February 14, 2012

Washington Post P. A12

As
part of its plan to police mortgage servicers, the Consumer Financial
Protection Bureau (CFPB) says that it will revise billing statements sent to
homeowners. The new version will present not only the principal balance and
interest rate but additionally will disclose the date that the interest could
re-set as well as detailed information on late payment or penalty fees. The
CFPB also will alter required disclosures for certain complex mortgages and
draft new rules to ensure that servicers properly charge for homeowners'
insurance. Servicers could not move borrowers into "forced-place
insurance" unless they have fallen behind on insurance payments. The
consumer watchdog also could propose changes that would allow consumers to find
their own replacement insurance rather than rely upon the option provided by
the mortgage servicer. The changes set forth by the CFPB on Feb. 13 apply to
both servicing firms owned by banks as well as to nonbank servicers, which were
excluded from a landmark settlement between servicers and state and federal
agencies over improprieties. National Consumer Law Center staff attorney Alys
Cohen called the moves by the CFPB a "strong first step," but she
hopes that ultimately the regulator will force nonbank servicers to determine
if borrowers qualify for a loan workout before they initiate foreclosure. Under
the national settlement with servicers, they are only prohibited from moving
forward with foreclosure at the same time that a modification is being
considered.Web Link